Peer-to-peer digital currencies are presently the most talked about topic in the world of finances. With benefits like substantial potential gains, increased user autonomy, ease of transactions, and increased security and transparency to their credit, cryptocurrencies have successfully managed to captivate investors worldwide. Bitcoin is the largest and highest valued cryptocurrency at present. Debuting in 2009, this currency has ushered in an entirely new era of digital finances.
Like all other digital currencies, bitcoin functions entirely on a peer-to-peer basis. That means individuals who own this currency can hold transactions between them without the intervention of any central agency. No country or bank either issues or regulates this currency. Instead, a thoroughly computerized process of minting is responsible for generating it.
As such, each country has a different opinion regarding it. While some countries have shown a quick acceptance of the potential of this currency, others have remained extremely stringent regarding their disapproval of it. Let us take a look at where different countries stand regarding the legality of bitcoin.
Countries that have taken steps towards legalizing bitcoin
Most countries are yet to state their position regarding the legality of bitcoin clearly. While many have issued stringent bans on the transactions of this currency, others have mostly adopted a wait-and-see approach. However, some of these countries have shown a positive attitude towards bitcoin by issuing specific observatory regulations. Let us look at some countries that have taken steps towards legalizing this cryptocurrency.
- El Salvador
El Salvador became the first country to grant complete acceptance to bitcoin as its legal tender in September 2021. El Salvador legalized bitcoin to restore its financial stability after suffering from an extreme economic crisis due to the pandemic.
The USA has always had a generally positive attitude towards bitcoin. Although not a legal tender in the country, bitcoin falls under the category of the money services business in the US. That puts it under the Bank Secrecy Act and requires it to meet specific regulations. The US also categorizes it as property.
Like the US, Canada also views bitcoin as property, considering its exchanges as barter and treating money earned from the same as business earnings. It has a generally bitcoin-friendly attitude.
Austria holds bitcoin neither as foreign currency nor as money. It is seen as an asset by the Australian Taxation Office and is liable to taxation.
- European Union
Countries of the EU also have a friendly outlook towards bitcoin. While the ECJ has exempted bitcoin from Value Added Tax, many countries have adopted personal stances in this regard. The UK has a pro-bitcoin perspective and keeps the regulatory environment supportive of the currency. Countries like Finland and Belgium have also exempted it from VAT.
Countries that have rejected bitcoin
While all the countries mentioned above have a supportive attitude towards cryptocurrencies, many have refused to acknowledge their potential. These countries essentially hold that since bitcoin has no centralized control, anyone can use it for nefarious activities. These countries view bitcoin as a threat to social and economic order because of its links to human trafficking, drug trafficking, and money laundering. As such, they have shunned these financial tools entirely. Some such countries are:
China has entirely banned bitcoin. The Chinese law prohibits all financial institutions from conducting Bitcoin transactions. Unlike bitcoinsystem.app, China has also banned platforms dealing in bitcoin.
The Russian government has made no attempts to regulate bitcoin in its territory. However, using bitcoin as a currency to pay for commodities is illegal.
The bank of Vietnam does not recognize bitcoin as a legitimate currency. The Vietnamese law does not acknowledge any transaction of this cryptocurrency.
Bitcoin has been in the market for more than a decade now. At a glance, it appears to have a majestic and well-established digital currency system. However, no uniform international law regulates this digital currency. While this allows for greater user autonomy and ease of transactions, it also confuses users and contributes to the volatility of bitcoin.